The preparation
of the unaudited condensed consolidated financial statements in conformity with generally accepted accounting principles in the
United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ from these estimates. Significant estimates during the three
and nine months ended September 30, 2018 and 2017 include the allowance for doubtful accounts, reserve for obsolete inventory,
the useful life of property and equipment and investment in real estate and intangible assets, assumptions used in assessing impairment
of long-term assets, valuation of deferred tax assets and the associated valuation allowances, and valuation of stock-based compensation.

Fair Value of Financial Instruments
and Fair Value Measurements

The Company adopted
the guidance of Accounting Standards Codification (“ASC”) 820 for fair value measurements which clarifies the definition
of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used
in measuring fair value as follows:

●

Level 1-Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date.

●

Level 2-Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data.

●

Level 3-Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information.

The carrying
amounts reported in the condensed consolidated balance sheets for cash, accounts receivable, account receivable – related
party, tenants receivable, security deposit, security deposit – related party, inventory, prepaid expenses and other current
assets, accounts payable, accrued liabilities and other payables, accrued liabilities and other payables – related parties,
deferred rental income, interest payable, Value Added Tax (“VAT”) and other taxes payable, tenants’ security
deposit, and due to related party, approximate their fair market value based on the short-term maturity of these instruments.
At September 30, 2018 and December 31, 2017, intangible assets were measured at fair value on a nonrecurring basis as shown in
the following tables.

Quoted Price in Active Markets for Identical Assets (Level 1)

Significant Other Observable Inputs (Level 2)

Significant Unobservable Inputs (Level 3)

Balance at September 30, 2018

Impairment Loss

Patents and other technologies

$

—

$

—

$

1,337,582

$

1,337,582

$

—

Quoted Price in Active Markets for Identical Assets (Level 1)

Significant Other Observable Inputs (Level 2)

Significant Unobservable Inputs (Level 3)

Balance at December 31, 2017

Impairment Loss

Patents and other technologies

$

—

$

—

$

1,583,260

$

1,583,260

$

923,769

Goodwill

—

—

—

—

397,569

Total

$

—

$

—

$

1,583,260

$

1,583,260

$

1,321,338

In December 2017, the Company assessed its
long-lived assets for any impairment and concluded that there were indicators of impairment as of December 31, 2017 and it calculated
that the estimated undiscounted cash flows were less than the carrying amount of the intangible assets. Based on its analysis,
the Company recognized an impairment loss of $1,321,338 for the year ended December 31, 2017, which reduced the value of intangible
assets acquired to $1,583,260. The Company did not record any impairment charge for the three and nine months ended September 30,
2018.

ASC 825-10 “Financial Instruments”,
allows entities to voluntarily choose to measure certain financial assets and liabilities at fair value (fair value option). The
fair value option may be elected on an instrument-by-instrument basis and is irrevocable, unless a new election date occurs. If
the fair value option is elected for an instrument, unrealized gains and losses for that instrument should be reported in earnings
at each subsequent reporting date. The Company did not elect to apply the fair value option to any outstanding instruments.

Cash

Cash consists of cash on hand and cash in banks.
The Company maintains cash with various financial institutions in the PRC and United States. At September 30, 2018 and December
31, 2017, cash balances in PRC are $1,654,815 and $1,327,009, respectively, are uninsured. At September 30, 2018 and December 31,
2017, cash balances in United States are $2,155,324 and $1,700,024, respectively. The Company has not experienced any losses in
bank accounts and believes it is not exposed to any risks on its cash in bank accounts.

Concentrations
of Credit Risk

Currently, a portion of the Company’s
operations are carried out in PRC. Accordingly, the Company’s business, financial condition and results of operations may
be influenced by the political, economic and legal environment in the PRC, and by the general state of the PRC’s economy.
The Company’s operations in PRC are subject to specific considerations and significant risks not typically associated with
companies in North America. The Company’s results may be adversely affected by changes in governmental policies with respect
to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation,
among other things.

Financial instruments which potentially subject
the Company to concentrations of credit risk consist principally of cash, trade accounts receivable and tenants receivable. A
portion of the Company’s cash is maintained with state-owned banks within the PRC, and none of these deposits are covered
by insurance. The Company has not experienced any losses in such accounts and believes it is not exposed to any risks on its cash
in bank accounts. A portion of the Company’s sales are credit sales which is to the customer whose ability to pay is dependent
upon the industry economics prevailing in these areas; however, concentrations of credit risk with respect to trade accounts receivable
and tenants receivable is limited due to generally short payment terms. The Company also performs ongoing credit evaluations of
its customers to help further reduce credit risk.

At September 30, 2018 and December 31, 2017,
the Company’s cash balances by geographic area were as follows:

Country:

September 30, 2018

December 31, 2017

United States

$

2,155,324

56.6

%

$

1,700,024

56.2

%

China

1,654,815

43.4

%

1,327,009

43.8

%

Total cash

$

3,810,139

100.0

%

$

3,027,033

100.0

%

Accounts Receivable and Allowance for Doubtful
Accounts

Accounts receivable are presented net of an
allowance for doubtful accounts. The Company maintains allowances for doubtful accounts for estimated losses. The Company reviews
the accounts receivable on a periodic basis and makes general and specific allowances when there is doubt as to the collectability
of individual balances. In evaluating the collectability of individual receivable balances, the Company considers many factors,
including the age of the balance, a customer’s historical payment history, its current credit-worthiness and current economic
trends. Accounts are written off after exhaustive efforts at collection.

Management believes that the accounts receivable
are fully collectable. Therefore, no allowance for doubtful accounts is deemed to be required on its accounts receivable at September
30, 2018 and December 31, 2017. The Company historically has not experienced uncollectible accounts from customers granted with
credit sales.

Tenants Receivable and Allowance for Doubtful Accounts

Tenants receivable are presented net of an
allowance for doubtful accounts. Tenants receivable balance consist of base rents, tenant reimbursements and receivables arising
from straight-lining of rents primarily represent amounts accrued and unpaid from tenants in accordance with the terms of the respective
leases, subject to the Company’s revenue recognition policy. An allowance for the uncollectible portion of tenant receivable
is determined based upon an analysis of the tenant’s payment history, the financial condition of the tenant, business conditions
in the industry in which the tenant operates and economic conditions in Freehold, New Jersey in which the property is located.

Management believes that the tenants receivable
are fully collectable. Therefore, no allowance for doubtful accounts is deemed to be required on its tenants receivable at September
30, 2018 and December 31, 2017.

Inventory

Inventory is stated at the lower of cost and
net realizable value. Cost is determined using the first-in, first-out (FIFO) method. A reserve is established when management
determines that certain inventory may not be saleable. If inventory costs exceed expected market value due to obsolescence or quantities
in excess of expected demand, the Company will record reserve for the difference between the cost and the lower of cost or estimated
net realizable value. The reserve is recorded based on estimates. The Company did not record any inventory reserve at September
30, 2018 and December 31, 2017.

Property and Equipment

Property and equipment are carried at cost
and are depreciated on a straight-line basis over the estimated useful lives of the assets. The cost of repairs and maintenance
is expensed as incurred; major replacements and improvements are capitalized. When assets are retired or disposed of, the cost
and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in income in the year
of disposition. The Company examines the possibility of decreases in the value of fixed assets when events or changes in circumstances
reflect the fact that their recorded value may not be recoverable.

Investment in Real Estate and Depreciation

Investment in
real estate is carried at cost less accumulated depreciation and consists of building and improvement. The Company depreciates
real estate building and improvement on a straight-line basis over estimated useful life. Expenditures for ordinary repair and
maintenance costs are charged to expense as incurred. Expenditure for improvements, renovations, and replacements of real estate
asset is capitalized and depreciated over its estimated useful life if the expenditure qualifies as betterment. Real estate depreciation
expense was $31,805 and $20,066 for the three months ended September 30, 2018 and 2017, respectively. Real estate depreciation
expense was $95,416 and $53,009 for the nine months ended September 30, 2018 and 2017, respectively.

Intangible Assets

Intangible assets consist of patents and other
technologies. Patents and other technologies are being amortized on a straight-line method over the estimated useful life of 5
years.

Impairment of Long-lived Assets

In accordance with ASC Topic 360, the Company
reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets
may not be fully recoverable, or at least annually. The Company recognizes an impairment loss when the sum of expected undiscounted
future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between
the asset’s estimated fair value and its book value. The Company did not record any impairment charge for the three and nine
months ended September 30, 2018 and 2017.

Acquisition Consideration

On October 25, 2017, GenExosome entered into
and closed a Stock Purchase Agreement with Beijing Jieteng (GenExosome) Biotech Co. Ltd., a corporation incorporated in the People’s
Republic of China (“Beijing GenExosome”) and Dr. Zhou, the sole shareholder of Beijing GenExosome, pursuant to which
GenExosome acquired all of the issued and outstanding securities of Beijing GenExosome in consideration of a cash payment in the
amount of $450,000.

On October 25, 2017, Dr. Zhou was appointed
to the board of directors of GenExosome and served as Co-chief executive officer of GenExosome. As of September 30, 2018 and December
31, 2017, the unpaid acquisition consideration of $250,000 and $450,000, respectively, was recorded as due to related party on
the accompanying condensed consolidated balance sheets.

Deferred Rental Income

Deferred rental income represents rental income
collected but not earned as of the reporting date. The Company defers the revenue related to lease payments received from tenants
in advance of their due dates. As of September 30, 2018 and December 31, 2017, deferred rental income totaled $3,525 and $12,769,
respectively.

Value Added Tax

Avalon Shanghai is subject to a value added
tax (“VAT”) of 6% for providing medical related consulting services and Beijing GenExosome is subject to a VAT of
3% for performing development services and sales of developed products. The amount of VAT liability is determined by applying
the applicable tax rates to the invoiced amount of medical related consulting services provided and the invoiced amount of development
services provided and sales of developed products (output VAT) less VAT paid on purchases made with the relevant supporting invoices
(input VAT). The Company reports revenue net of PRC’s value added tax for all the periods presented in the unaudited condensed
consolidated statements of operations and comprehensive loss.

Revenue Recognition

In May
2014, the Financial Accounting Standards Board (“FASB”) issued an update Accounting Standards Update (“ASU”)
(“ASU 2014-09”) establishing Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts
with Customers (“ASC 606”). ASU 2014-09, as amended by subsequent ASUs on the topic, establishes a single comprehensive
model for entities to use in accounting for revenue arising from contracts with customers and supersedes most of the existing revenue
recognition guidance. This standard, which is effective for interim and annual reporting periods in fiscal years that begin after
December 15, 2017, requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in
an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services and
also requires certain additional disclosures. The Company adopted this standard in 2018 using the modified retrospective approach,
which requires applying the new standard to all existing contracts not yet completed as of the effective date and recording a cumulative-effect
adjustment to retained earnings as of the beginning of the fiscal year of adoption. Based on an evaluation of the impact ASU 2014-09
will have on the Company’s sources of revenue, the Company has concluded that ASU 2014-09 did not have a material impact
on the process for, timing of, and presentation and disclosure of revenue recognition from customers.

Types of revenue:

●

Rental revenue from leasing commercial property under operating leases with terms of generally three years or more.

●

Service fees under consulting agreements with related parties to provide medical related consulting services to its clients. The Company is paid for its services by its clients pursuant to the terms of the written consulting agreements. Each contract calls for a fixed payment.

●

Service fees under agreements to perform development services for hospitals and other customers. The Company does not perform contracts that are contingent upon successful results.

●

Sales of developed products to hospitals and other customers.

Revenue recognition criteria:

●

The Company recognizes rental revenue from its commercial leases on a straight-line basis over the life of the lease including rent holidays, if any. Straight-line rent receivable consists of the difference between the tenants’ rents calculated on a straight-line basis from the date of lease commencement over the remaining terms of the related leases and the tenants’ actual rents due under the lease agreements and is included in tenants receivable in the accompanying consolidated balance sheets. Revenues associated with operating expense recoveries are recognized in the period in which the expenses are incurred.

●

The Company recognizes revenue by providing medical related consulting services under written service contracts with its customers. Revenue related to its service offerings is recognized as the services are performed and amounts are earned and all other elements of revenue recognition have been satisfied. Prepayments, if any, received from customers prior to the services being performed are recorded as advance from customers. In these cases, when the services are performed, the amount recorded as advance from customers is recognized as revenue.

●

Revenue from development services performed under written contracts is recognized when it is earned pursuant to the terms of the contract. Each contract calls for a fixed dollar amount with a specified time period. These contracts generally involve up-front payment. Revenue is recognized for these projects as services are provided.

●

Revenue from sales of developed items to hospitals and other customers is recognized when items are shipped to customers and titles are transferred.

The Company does not offer promotional payments,
customer coupons, rebates or other cash redemption offers to its customers.

Sales tax collected
is not recognized as revenue and amounts outstanding are included in accrued liabilities and other payables in the consolidated
balance sheets.

Office Lease

When
a lease contains “rent holidays”, the Company records rental expense on a straight-line basis over the term
of the lease and the difference between the average rental amount charged to expense and the amount payable under the lease is
recorded as prepaid expenses in the consolidated balance sheets. The Company begins recording rent expense on the lease possession
date.

Shipping and Handling Costs

Shipping and handling costs are expensed as
incurred and are included in cost of sales. For the three months ended September 30, 2018 and 2017, the Company did not incur shipping
and handling costs. For the nine months ended September 30, 2018 and 2017, shipping and handling costs amounted to $25 and $0,
respectively.

Research and Development

Expenditures for research and product development
costs are expensed as incurred. The Company incurred research and development expense in the amount of $1,384 and $1,647 related
to the development of proprietary diagnostic and therapeutic products leveraging exosome technology and optimization of Exosome
Isolation Systems in the three and nine months ended September 30, 2018. The Company did not incur any research and development
costs during the three and nine months ended September 30, 2017.

Advertising Costs

All costs related to advertising are expensed
as incurred. For the three and nine months ended September 30, 2018, advertising costs amounted to $150,548. The Company did not
incur any advertising expenses during the three and nine months ended September 30, 2017.

Costs of development services and sales of
developed items includes inventory costs, materials and supplies costs, depreciation, internal labor and related benefits, other
overhead costs and shipping and handling costs incurred.

Stock-based Compensation

Stock-based compensation is accounted for based
on the requirements of the Share-Based Payment topic of Accounting Standards Codification (“ASC”) 718 which requires
recognition in the financial statements of the cost of employee and director services received in exchange for an award of equity
instruments over the period the employee or director is required to perform the services in exchange for the award. The Accounting
Standards Codification also requires measurement of the cost of employee and director services received in exchange for an award
based on the grant-date fair value of the award.

Pursuant to ASC Topic 505-50, for share-based
payments to consultants and other third-parties, compensation expense is recognized over the period of services or the vesting
period, whichever is applicable. Until the measurement date is reached, the total amount of compensation expense remains uncertain.
The Company’s compensation expense for unvested options to non-employees is re-measured at each balance sheet date and is
being amortized over the vesting period of the options.

Income Taxes

The Company accounts for income taxes using
the asset/liability method prescribed by ASC 740, “Income Taxes.” Under this method, deferred tax assets and liabilities
are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax
rates that will be in effect in the period in which the differences are expected to reverse. The Company records a valuation allowance
to offset deferred tax assets if, based on the weight of available evidence, it is more-likely-than-not that some portion, or all,
of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rates is recognized as income
or loss in the period that includes the enactment date.

The Company follows the accounting guidance
for uncertainty in income taxes using the provisions of ASC 740 “Income Taxes”. Using that guidance, tax positions
initially need to be recognized in the financial statements when it is more likely than not the position will be sustained upon
examination by the tax authorities. As of September 30, 2018 and December 31, 2017, the Company had no significant uncertain tax
positions that qualify for either recognition or disclosure in the financial statements. Tax year that remains subject to examination
is the years ended December 31, 2017, 2016 and 2015. The Company recognizes interest and penalties related to significant uncertain
income tax positions in other expense. However, no such interest and penalties were recorded as of September 30, 2018 and December
31, 2017.

In December 2017,
the United States Government passed new tax legislation that, among other provisions, will lower the corporate tax rate from 35%
to 21%. In addition to applying the new lower corporate tax rate in 2018 and thereafter to any taxable income the Company may have,
the legislation affects the way the Company can use and carryforward net operating losses previously accumulated and results in
a revaluation of deferred tax assets and liabilities recorded on the balance sheet. Given that current deferred tax assets are
offset by a full valuation allowance, these changes will have no net impact on the balance sheet. However, when the Company becomes
profitable, the Company will receive a reduced benefit from such deferred tax assets.

Foreign Currency Translation

The reporting currency of the Company is the
U.S. dollar. The functional currency of the parent company, AHS, Avalon RT 9, GenExosome, and Avactis, is the U.S. dollar and the
functional currency of Avalon Shanghai and Beijing GenExosome, is the Chinese Renminbi (“RMB”). For the subsidiaries
whose functional currency is the RMB, result of operations and cash flows are translated at average exchange rates during the period,
assets and liabilities are translated at the unified exchange rate at the end of the period, and equity is translated at historical
exchange rates. As a result, amounts relating to assets and liabilities reported on the statements of cash flows may not necessarily
agree with the changes in the corresponding balances on the balance sheets. Translation adjustments resulting from the process
of translating the local currency financial statements into U.S. dollars are included in determining comprehensive income/loss.
Transactions denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing on
the transaction dates. Assets and liabilities denominated in foreign currencies are translated into the functional currency at
the exchange rates prevailing at the balance sheet date with any transaction gains and losses that arise from exchange rate fluctuations
on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred.

All of the Company’s revenue transactions
are transacted in the functional currency of the operating subsidiaries. The Company does not enter into any material transaction
in foreign currencies. Transaction gains or losses have not had, and are not expected to have, a material effect on the results
of operations of the Company.

Asset and liability accounts at September 30,
2018 and December 31, 2017 were translated at 6.8690 RMB to $1.00 and at 6.5067 RMB to $1.00, respectively, which were the exchange
rates on the balance sheet dates. Equity accounts were stated at their historical rates. The average translation rates applied
to the statements of operations for the nine months ended September 30, 2018 and 2017 were 6.5197 RMB and 6.8071 RMB to $1.00,
respectively. Cash flows from the Company’s operations are calculated based upon the local currencies using the average translation
rate.

Comprehensive Loss

Comprehensive loss is comprised of net loss
and all changes to the statements of equity, except those due to investments by stockholders, changes in paid-in capital and distributions
to stockholders. For the Company, comprehensive loss for the nine months ended September 30, 2018 and 2017 consisted of net loss
and unrealized (loss) gain from foreign currency translation adjustment.

Per Share Data

ASC Topic 260 “Earnings per Share,”
requires presentation of both basic and diluted earnings per share (“EPS”) with a reconciliation of the numerator and
denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. Basic EPS excludes dilution.
Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised
or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity.

Basic net loss per share are computed by dividing
net loss available to common stockholders by the weighted average number of shares of common stock outstanding during the period.
Diluted net loss per share is computed by dividing net loss by the weighted average number of shares of common stock, common stock
equivalents and potentially dilutive securities outstanding during each period. Potentially dilutive common shares consist of the
common shares issuable upon the exercise of common stock options and warrants (using the treasury stock method). Common stock equivalents
are not included in the calculation of diluted net loss per share if their effect would be anti-dilutive. In a period in which
the Company has a net loss, all potentially dilutive securities are excluded from the computation of diluted shares outstanding
as they would have had an anti-dilutive impact. The following table presents a reconciliation of basic and diluted net loss per
share:

Three Months Ended September 30,

Nine Months Ended September 30,

2018

2017

2018

2017

Net loss available to Avalon GloboCare Corp. common shareholders for basic and diluted net loss per share of common stock

$

(2,344,670

)

$

(710,729

)

$

(5,120,643

)

$

(1,690,570

)

Weighted average common stock outstanding - basic and diluted

72,573,462

64,628,622

71,611,375

63,958,292

Net loss per common share attributable to Avalon GloboCare Corp. common shareholders - basic and diluted

$

(0.03

)

$

(0.01

)

$

(0.07

)

$

(0.03

)

The
following table summarizes the securities that were excluded from the diluted per share calculation because the effect of including
these potential shares was antidilutive:

Three Months Ended September 30,

Nine Months Ended September 30,

2018

2017

2018

2017

Stock options

2,670,000

484,448

2,670,000

484,448

Warrants

578,891

—

578,891

—

Potentially dilutive securities

3,248,891

484,448

3,248,891

484,448

Business Acquisition

The Company accounts for business acquisition
in accordance with ASC No. 805, Business Combinations. The assets acquired and liabilities assumed from the acquired business
are recorded at fair value, with the residual of the purchase price recorded as goodwill. The result of operations of the acquired
business is included in the Company’s operating result from the date of acquisition.

Non-controlling
Interest

As of
September 30, 2018, Dr. Yu Zhou, director and Co-Chief Executive Officer of GenExosome, who owned 40% of the equity interests
of GenExosome, which is not under the Company’s control.

Segment Reporting

The Company
uses “the management approach” in determining reportable operating segments. The management approach considers the
internal organization and reporting used by the Company’s chief operating decision maker for making operating decisions and
assessing performance as the source for determining the Company’s reportable segments. The Company’s chief operating
decision maker is the chief executive officer (“CEO”) and president of the Company, who reviews operating results to
make decisions about allocating resources and assessing performance for the entire Company. The Company has determined that it
has three reportable business segments: real property operating segment, medical related consulting services segment, and development
services and sales of developed products segment. These reportable segments offer different types of services and products, have
different types of revenue, and are managed separately as each requires different operating strategies and management expertise.

Related Parties

Parties
are considered to be related to the Company if the parties, directly or indirectly, through one or more intermediaries, control,
are controlled by, or are under common control with the Company. Related parties also include principal owners of the Company,
its management, members of the immediate families of principal owners of the Company and its management and other parties with
which the Company may deal with if one party controls or can significantly influence the management or operating policies of the
other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. The Company
discloses all significant related party transactions.

Reclassification

Certain
prior period amounts have been reclassified to conform to the current period presentation. These reclassifications have no effect
on the previously reported financial position, results of operations and cash flows.

Reverse Stock Split

The Company
effected a one-for-four reverse stock split of its common stock on October 18, 2016. All share and per share information has been
retroactively adjusted to reflect this reverse stock split.

Fiscal Year End

The Company has adopted
a fiscal year end of December 31st.

Recent Accounting
Pronouncements

In July 2015, the Financial Accounting Standards
Board (“FASB”) issued Accounting Standards Update (“ASU”) 2015-11, “Inventory (Topic 330): Simplifying
the Measurement of Inventory”, which provides new guidance regarding the measurement of inventory. The new guidance
requires most inventory to be measured at the lower of cost or net realizable value. The standard defines net realizable value
as estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation.
The standard applies to companies other than those that measure inventory using last-in, first-out (“LIFO”) or the
retail inventory method. The standard is effective for annual reporting periods beginning after December 15, 2016, including
interim periods within those reporting periods. Early application is permitted. Effective January 1, 2017, the Company adopted
ASU No. 2015-11 and it had no material impact on the Company’s consolidated financial statements.

In February 2016,
the FASB issued ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”), which modified lease accounting for both lessees
and lessors to increase transparency and comparability by recognizing lease assets and lease liabilities by lessees for those
leases classified as operating leases under previous accounting standards and disclosing key information about leasing arrangements.
This pronouncement is effective for reporting periods beginning after December 15, 2018 using a modified retrospective adoption
method. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial
statements.

In January 2017, the
FASB issued Accounting Standards Update No. 2017-04, Simplifying the Test for Goodwill Impairment (“ASU 2017-04”).
ASU 2017-04 simplifies the accounting for goodwill impairment by removing Step 2 of the goodwill impairment test, which requires
a hypothetical purchase price allocation. ASU 2017-04 is effective for annual or interim goodwill impairment tests in fiscal years
beginning after December 15, 2019, and should be applied on a prospective basis. Early adoption is permitted for interim or annual
goodwill impairment tests performed on testing dates after January 1, 2017. The adoption of this guidance is not expected
to have a material impact on the Company’s consolidated financial statements.

In May 2017, the FASB
issued ASU No. 2017-09, “Modification Accounting for Share-Based Payment Arrangements”, which amends the scope of modification
accounting for share-based payment arrangements. The ASU provides guidance on the types of changes to the terms or conditions of
share-based payment awards to which an entity would be required to apply modification accounting under ASC 718. Specifically, an
entity would not apply modification accounting if the fair value, vesting conditions, and classification of the awards are the
same immediately before and after the modification. The ASU is effective for annual reporting periods, including interim periods
within those annual reporting periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in any
interim period. Effective January 1, 2018, the Company adopted ASU No. 2017-09 and it had no material impact on the Company’s
consolidated financial statements.

On
December 22, 2017 the SEC staff issued Staff Accounting Bulletin 118 (“SAB 118”), which provides guidance
on accounting for the tax effects of the Tax Cuts and Jobs Act (the TCJA). SAB 118 provides a measurement period that
should not extend beyond one year from the enactment date for companies to complete the accounting under ASC 740. In accordance
with SAB 118, a company must reflect the income tax effects of those aspects of the TCJA for which the accounting under ASC
740 is complete. To the extent that a company’s accounting for certain income tax effects of the TCJA is incomplete
but for which they are able to determine a reasonable estimate, it must record a provisional amount in the financial statements. Provisional
treatment is proper in light of anticipated additional guidance from various taxing authorities, the SEC, the FASB, and even the
Joint Committee on Taxation. If a company cannot determine a provisional amount to be included in the financial statements,
it should continue to apply ASC 740 on the basis of the provisions of the tax laws that were in effect immediately before the enactment
of the TCJA. The Company has applied this guidance to its consolidated financial statements.

In February
2018, the FASB issued ASU 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220)—Reclassification
of Certain Tax Effects from Accumulated Other Comprehensive Income. This update was issued to address the income tax accounting
treatment of the stranded tax effects within other comprehensive income due to the prohibition of backward tracing due to an income
tax rate change that was initially recorded in other comprehensive income. This issue came about from the enactment of the Tax
Cuts and Jobs Ac t on December 22, 2017, which changed the Company’s income tax rate from 35% to 21%. The ASU changed
current accounting whereby an entity may elect to reclassify the stranded tax effect from accumulated other comprehensive income
to retained earnings. The ASU is effective for periods beginning after December 15, 2018, although early adoption is permitted.
The Company does not anticipate that the adoption of this ASU will have a material impact on its consolidated financial statements.

In March
2018, the FASB issued ASU No. 2018-05 (“ASU 2018-05), Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant
to SEC Staff Accounting Bulletin No. 118. This standard amends ASC 740, Income Taxes, to provide guidance on accounting for
tax effects of the Tax Cuts and Jobs Act (the “Tax Act”) pursuant to Staff Accounting Bulletin No. 118, which allows
companies to complete the accounting under ASC 740 within one-year measurement period from the Tax Act enactment date. This standard
is effective upon issuance. The Company has decided to follow the guidance provided by ASU 2018-05 and will leave the one-year
measurement period open to evaluate the impact of the Tax Act.

Other accounting standards
that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material
impact on the consolidated financial statements upon adoption. The Company does not discuss recent pronouncements that are not
anticipated to have an impact on or are unrelated to its consolidated financial condition, results of operations, cash flows or
disclosures.

The entire disclosure for the organization, consolidation and basis of presentation of financial statements disclosure, and significant accounting policies of the reporting entity. May be provided in more than one note to the financial statements, as long as users are provided with an understanding of (1) the significant judgments and assumptions made by an enterprise in determining whether it must consolidate a VIE and/or disclose information about its involvement with a VIE, (2) the nature of restrictions on a consolidated VIE's assets reported by an enterprise in its statement of financial position, including the carrying amounts of such assets, (3) the nature of, and changes in, the risks associated with an enterprise's involvement with the VIE, and (4) how an enterprise's involvement with the VIE affects the enterprise's financial position, financial performance, and cash flows. Describes procedure if disclosures are provided in more than one note to the financial statements.